Replies to This Discussion

Permalink Reply by Pam on September 13, 2010 at 16:39

Hi Henry -- again thanks for all you're doing with this. I don't know much about O&G, but I do know a byte about data. I imagine to get a true picture it's gonna take a compilation of several months. I'll gladly provide you with the prices listed on the statements I receive as a UMO. I've only received thru May so far; the info is a little slow in coming. I'm hanging in for the long haul!!!

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Permalink Reply by Henry on September 13, 2010 at 22:54

Pam,
If you have pricing data for May, please provide it. I'll add that into my database. Good luck with going UMO.

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Permalink Reply by Pam on September 14, 2010 at 2:10

Henry, this is how I replied last night to a post from grasshopper (who is leased with CHK while I'm unleased - same well) a couple of pages back:

Hey Grasshopper!

Henry, thanks for all the effort you are putting into this. It'll be interesting to see how this plays out over the next few months.

I have unleased property in the unit that contains this well #240294 and am receiving cost reports from Encana. They are showing:

April: 191649 MCF @ $3.78

May: 478584 MCF @ $4.05

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Permalink Reply by Pam on September 14, 2010 at 2:43

WooHoo! I received an erroneous cost report for May that showed it being almost half-way paid out after only 2 mos of production. I knew it was a good well but something told me that report was too good to be true, lol! Have since received a corrected report. Thanks for the encouragement Jay!

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Permalink Reply by Henry on September 14, 2010 at 3:24

Pam,
You got one awesome well. You may finally be a UMO who gets a good payout! And, SWEPI is giving you good prices. Congrats!

Thanks for your data. Please continue to provide it each month. I really appreciate it.

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Permalink Reply by Henry on September 14, 2010 at 3:32

One more comment...

At 1BCF of production, and $4 for your gas, you are, indeed, almost halfway to payout. By 2.5 BCF you ought to be there.

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Permalink Reply by Pam on September 14, 2010 at 4:08

Thanks Henry - that is good news!

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Permalink Reply by Henry on September 14, 2010 at 9:44

Hello Everyone,

I think we have turned the corner on one issue with regard to this discussion. And that is the fact that Chesapeake has different reporting methods than the other companies. Most companies, on their monthly statements, will show a gross price, and then single out all deductions for such things as treating, transportation, severance tax, etc. If you have cost-free royalties, then no deductions are taken, except for severance tax.

Chesapeake, on the other hand, only shows you the amount that you actually receive. You will not see the gross price, nor the amount of each deduction (except for severance tax).

So now, I want to move to Phase 2 of this discussion. I am now asking each respondent to provide me the following:

Section/Township/Range -- everyone (if you are in Texas, tell me your county, and the survey)

If you get your check from Chesapeake, please tell me:
Price received (before severance tax)
Does your lease entitle you to cost-free royalties?

If you get your check from one of the others, please tell me:
Company you leased to
Company who is operating the well
Gross price
Please tell me each deduction, and the amount.
Net amount (before severance tax). [I know, gross minus deductions ought to equal net, but I just want to make sure.]
Does your lease entitle you to cost-free royalties?

If you are WI or UMO:
Company operating the well
Gross price
Please tell me each deduction, and the amount.
Net amount (before severence tax). [I know, gross minus deductions ought to equal net, but I just want to make sure.]

All answers will be kept confidential. Also, would those of you who provided initial data, please get back to me about your deductions? Thanks.

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Permalink Reply by DrWAVeSport Cd1 on September 14, 2010 at 17:22

GHS FYI: 2/25/2010: "Houston Court Rejects "Weighted Average Royalty Payment Calculation" Under Lease Agreement" (written by Natalie Barletta, 4/6/2010)

http://www.theenergylawblog.com/2010/04/articles/royalty/houston-co...

Given, this is Tx, however, there are some O&Gs who are underpaying royalty owners.

JMHO...Certified Mail can be a mineral owners best friend. Always send questions or demands by certified mail and request answers in writing from payor.

"...Whenever the royalty owner is uncertain or suspect about a deduction from the royalty, send an inquiry to the payor for clarification. Hesitating may allow the statute of limitations to expire." Judon Fambrough, State Bar of Tx, "Scrutinizing Royalty Payments." Letter of the Law, April 2002, Publication 1559.

It never hurts to question anyone about anything involving your time and money. GHS is proof.

DrWAVeSport Cd1 9/14/2010

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Permalink Reply by G-Dawg on September 15, 2010 at 8:18

Henry,

Will you be including the locations with the owners on your spreadsheet once you start receiving that info. When talking to CHK, they want to limit the conversaton specific to the producing well that your royalty is coming from and not others outside that section. By adding it to your spreadsheet the viewer can compare price of owners on the same well.

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Permalink Reply by Henry on September 15, 2010 at 11:57

G-Dawg,
I have limited myself to posting the field name so far. Some of the landowners have asked to remain anonymous, so I don't want to go into more detail. If there is someone in my list who is very near you, I can check with them, and see if they will agree to friend you and communicate.

Right now, I cannot go much further with this discussion, unless I get more respondents. I'm not getting enough data. I also really need those of you (Chesapeake and non-Chesapeake) who gave me their gross prices in Round 1, to go back and now provide me the amount of any deductions that may have been shown on your stubs. Without more facts, it will be hard to take this discussion much further.

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Permalink Reply by DrWAVeSport Cd1 on September 16, 2010 at 5:47

Henry, You have started a thread that should be of interest to all royalty owners in the HS. Chk will have a number of new wells going on line by the end of the year, quite a few in the next months. Your project will take some time. Please give this a few more months as I think it will take that long for GHSers to get on board. Many of us are in that long waiting period, i.e., division orders, UMOs, and those who have been waiting for wells to go on line. Added up, that's thousands of GHSers.

I am waiting on division orders as UMO. I will forward my Chk info to you (as soon as Chk decides to forward this info to me) for your project. I am confident there are many others sitting and waiting right now. Your project may be just a little ahead of the curve. Chk and their competitors are dragging their heels, IMO, per price of gas, waiting on pipe, and still drilling HS wells they wish they weren't having to drill (HBP) to hold acreage.

A. McLendon (Chk) said a few months ago (paraphrasing here), that they were being forced to do 50 years of work in just three. That right there says it all.

Give us GHSers a little time. We usually produce! LOL

Thanks for your work.

DrWAVeSport Cd1 9/16/10

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